What to do about Healthcare Abroad

Obamacare—Just One More Reason To Take Your Retirement Global

“With a few exceptions (notably, military policies), your U.S. health insurance probably won’t cover you outside the United States. And Medicare doesn’t cross U.S. borders either.”

That’s how I opened the “Health Care and Health Insurance” panel discussion at last week’s Retire Overseas Conference in San Antonio, Texas. It’s an important fundamental for any American making a plan for living or retiring overseas.

How, therefore, should you pay for your medical care as a retiree in another country? You have three options:

  • You could purchase a local insurance policy…
  • You could invest in an international insurance policy…
  • Or you could opt out of insurance altogether.

This last option may seem frightening and risky, maybe even crazy, but I know many full-time retirees overseas who have chosen to go the no-insurance route. They’ve done the math and realized that they’re better off keeping an emergency medical fund (an amount of money that would be enough to cover even catastrophic care in the country where they’re living), rather than paying monthly insurance premiums. When you’re talking about a place where a doctor’s visit costs US$2, as it can in Thailand or Vietnam, you begin to understand how this math adds up.

Friends Vicki and Paul Terhorst, for example, have been retired overseas for three decades. In that time, they’ve considered and reconsidered their options for health insurance. Initially, they invested in it. Then, after a few years of experience moving around the world, they decided to “go naked,” as it were.

They gave up their health insurance altogether. That decision has saved them US$250,000 over the years.

“And it’s not as though Paul and I have never had medical emergencies or health issues to address,” Vicki explains. “We’ve both had emergency surgeries and procedures performed in countries around the world at different times.

“Our total cost of health care in all these years has been about US$20,000. Because in the parts of the world where we’re enjoying life, medical care costs nothing like what it costs in the United States right now.

“It’s also not that we’re settling for sub-standard care,” Vicki continues. “We’re enjoying international-standard care. Really, we think the standard of care we’ve received in many circumstances has exceeded what we would have expected in the United States…”

Still, most retirees don’t feel comfortable having no medical insurance. In this case, you’re choosing between a local health care policy and an international one. A local policy is one purchased in the country where you’re intending to retire. The big advantage of this type of health insurance is that it can be super cheap. Depending on your age (which is the primary determining factor), you can purchase comprehensive coverage for care at international-standard facilities in some countries for as little as US$60 or US$70 a month. In other words, you could arrange health insurance in some of the most appealing retirement spots in Latin America, including Panama, Uruguay, Ecuador, and Colombia, for less than US$1,000 a year.

The downside to this kind of policy is that the coverage is limited geographically. A local health insurance policy will cover you only in the country where it’s purchased and sometimes only in particular regions or at particular facilities in that country. Some local health insurance purchased in Panama, for example, will cover you only in Panama or at a particular hospital.

This can be ok if you’re retiring full time in Panama and don’t intend to travel outside Panama often. Even if you’re intending to live full-time in a particular city, though, choosing to insure your medical care through a particular hospital in that city can be risky. Hospitals can and sometimes do go out of business. Then what?

If you intend to move around a little in your retirement overseas, you probably want to arrange health insurance through an international carrier. Perhaps you intend to base yourself in Ireland or France, for example, so you can travel regularly throughout Europe. Or maybe you’re considering retiring overseas part-time, basing yourself in Mexico but returning frequently to the United States so that you can stay in touch with your grandkids.

In situations like these, an international policy makes more sense, because you can customize it according to your plans. The biggest international health insurer is Bupa International. Coverage through Bupa is going to be more expensive than local coverage (perhaps considerably more), but it’s also going to be more flexible. And while international coverage is more costly than local coverage, it’s almost always less expensive than U.S. health insurance (Medicare aside).

“Once I’ve retired overseas, should I keep my Medicare?” asked one attendee at last week’s conference in San Antonio.

In short, yes.

Again, Medicare typically won’t do you any good outside the United States. However, I recommend that you continue to carry at least Medicare Part A, which is required if you’re going to keep your Social Security anyway, viewing it as a fallback plan. The best strategy is often to continue paying for Medicare while investing in a local country policy in the country where you intend to base your retirement.

“What about Obamacare?” asked another attendee last week. “Do you understand the implications of that legislation for retirees overseas?”

“No one understands Obamacare,” Lief replied, “including Obama.”

After the laughter subsided, Lief continued…

“What we can tell you is that, as a retiree overseas, you are exempt from Obamacare altogether. Once the U.S. government recognizes you as a bona-fide resident of another country, you’re in the clear, free of any Obamacare obligations.”

Just one more advantage, it turns out, of taking your retirement global.

Kathleen Peddicord

Continue reading: My New Start In Panama

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